Restaurant group ‘outraged’ over rising dairy costs

Pizzerias forced to pay import tariff after government closes loophole

The Canadian industry group representing restaurants says it’s “outraged” by recent government decisions to raise the price of dairy.

In late November, the federal government passed a motion closing a loophole that allowed pizza cheese to flow into the country from the U.S. without paying a steep 245 per cent tariff, and on Tuesday the Canadian Dairy Commission announced a one per cent increase for butter and some milk products as of Feb. 1, 2014.

“Weeks ago we presented to both the CDC and the federal government proposing a collaborative approach to set dairy prices and to modernize the current dairy system,” Garth Whyte, head of the Canadian Restaurant and Foodservices Association, said in a statement. “It is clear the CDC and the federal government are not listening.”

Pizzerias had been getting around the high price of imported cheese for about a year by buying their mozzarella and pepperoni together, which qualified it as a “food preparation” and exempt from the tariff. But as of Nov. 29, anything crossing the border that contains cheese is subject to the tariff, “regardless of their packaging.”

The CRFA says it wants to know why Canadians continue to pay some of the highest dairy prices in the world and why the government is so intent on protecting the dairy industry at the cost of consumers.

Dairy products in Canada have to adhere to the supply management system, in place for decades, which protects prices for domestic milk, cheese and butter. Although only benefiting a narrow slice of Canadians, changes to this system are notoriously difficult in Ottawa, given the industry’s centralization in vote-rich Quebec. The cheese cartel is so mighty it even threatened to derail Prime Minister Stephen Harper’s landmark free-trade deal with the European Union, and it could still be a sticking point before a final agreement is reached in the next few years.

The exorbitant price of dairy has even led to cheese smuggling in Ontario’s Niagara region, where even cops are implicated in getting the contraband across the border.